As traditional financial institutions reduce their exposure to cryptocurrencies following a series of ecosystem collapses in 2022, Binance CEO Changpeng Zhao warns that this move could have negative consequences for these players in the long term.
In a tweet, CZ acknowledged that the failed crypto projects of last year hindered growth in the industry but stated that the industry is already showing signs of recovery.
He went on to say that in the long term, these failures may cause traditional financial players to fall further behind in their adoption of cryptocurrency technology, which could have “existential implications” for them in the next 10-20 years.
CZ’s comments highlight the growing divide between traditional financial players and the cryptocurrency industry as more and more institutions distance themselves from the volatile and often unreliable world of digital assets.
However, his warning suggests that those who choose to ignore the potential of cryptocurrency technology do so at their own peril.
While the future of the cryptocurrency industry remains uncertain, it is clear that traditional financial players will need to tread carefully as they navigate this rapidly evolving landscape.
CZ’s warning serves as a reminder that even as the industry experiences setbacks, it still has the potential to disrupt and transform the traditional financial system in ways that we can’t yet imagine.
Binance BUSD Plummets, A Wipe Out Of Market Cap Gains
The market capitalization of Binance’s stablecoin, BUSD, has taken a sharp dive amid worries over solvency and mismanagement. Despite a temporary boost on September 30th, 2022, when Binance forced a swap of its USDC holders to BUSD, those gains have since evaporated.
Problems with the management of BUSD first came to light in January 2023, and despite Binance’s denial of reports that the stablecoin was not fully backed, investor fears led to a major outflow.
According to blockchain analytics provider Nansen, the circulating supply of BUSD decreased to $15.4 billion on January 25th, a drop of $1 billion from the previous week and $2 billion compared to December 2022.
The recent decline has accelerated BUSD’s market cap decrease from $22 billion, as investors rushed to withdraw money from Binance after it was revealed that the company had misrepresented the amount of digital assets in its collateral reserves by combining corporate holdings on reports.
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